Usher Agro
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2693
Printed Date: 21/Apr/2025 at 4:28pm
Topic: Usher Agro
Posted By: iaditya
Subject: Usher Agro
Date Posted: 07/Mar/2010 at 3:25pm
Has anybody looked at Usher Agro?
Jun05 Jun06 Jun07 Jun08 Jun09
Sales 33.11 38.48 69.60 141.24 209.10
EBITDA 3.35 3.78 7.18 18.87 27.11
I 1.24 1.38 1.77 1.95 5.37
Tax 0.62 0.32 0.85 2.87 4.78
PAT 0.98 1.62 3.88 12.64 14.85
1. Same industry as Lakshmi, largest player after him (current capacity is 0.25MMTPA)
2. consistent growth
3. fully funded to grow capacity to 1MTPA by end of next year.
4. present year target pat 24 (13 already done in H1) at present levels is trading at 4times current year and 6 times trailing
Any thoughts on this one?
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Replies:
Posted By: EquityInv
Date Posted: 07/Mar/2010 at 11:09pm
If you are really interested in sector, then it's better to stick with market leader [in Basanji's term] specially when there's not much valuation difference..
While Usher is just planning for biomass power plant [also it's IPO], Lakshmi already operates biomass plant and is incresing capacity.. In short, Lakshmi proved their execution in both business.
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One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do – James Rogers
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Posted By: excel_monkey
Date Posted: 07/Mar/2010 at 1:05am
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this is one of the stock named in the Nirmal Kotecha scam
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Posted By: iaditya
Date Posted: 12/Mar/2010 at 9:42am
lakshmi is trading at 9PE and usher at 6PE on a historical basis. the key is that usher has just completed doubled its capacity last year so on a FY10 basis is available at a PE of 4 and FY11 basis of 3. Going forward the company has already announce further capacity expansion to 500k; so on a fy12 basis stock is available at PE of 1. My guess is that for that expansion; company will take debt as leverage is less than 1.
All in all; i just think this that market has mispriced the growth (already is already funded). The company is fully funded to double profits and the market appears to discuont that. This may not be the market leader but is second; i guess thats not too bad considering the price.
promoter has increased his shareholding(a huge plus for me) and is a qualified chartered accountant. he appears to be a knowledgable man as much i could make out from one visit. i think the nirmal kotecha thing did not involve the promoter as much as it had to do with the float of the stock.
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Posted By: hit2710
Date Posted: 13/Mar/2010 at 6:30pm
Originally posted by iaditya
lakshmi is trading at 9PE and usher at 6PE on a historical basis.
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The investment argument in favour of usher looks attractive based on forward earnings but with these rice companies, lot depends upon monsoon and govt policy. So projection of earnings more than a few quarters should be taken with a pinch of salt.
Regarding Usher, does it have any value addition like lakshmi does while rice processing? If so it can be kept in watch.
Plus just as you mention some positives for Usher, lakshmi is entering retail packaged rice and wheat and flour business which would derisk its business model further. They also talk of coming out with some high quality healthy rice which would be beneficial for diabetics and other lifestyle diseases.
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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.
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Posted By: nannu_68
Date Posted: 13/Mar/2010 at 9:00pm
Originally posted by hit2710
Originally posted by iaditya
lakshmi is trading at 9PE and usher at 6PE on a historical basis.
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The investment argument in favour of usher looks attractive based on forward earnings but with these rice companies, lot depends upon monsoon and govt policy. So projection of earnings more than a few quarters should be taken with a pinch of salt.
Regarding Usher, does it have any value addition like lakshmi does while rice processing? If so it can be kept in watch.
Plus just as you mention some positives for Usher, lakshmi is entering retail packaged rice and wheat and flour business which would derisk its business model further. They also talk of coming out with some high quality healthy rice which would be beneficial for diabetics and other lifestyle diseases. |
IMHO the biggest plus Lakshmi has over usher is foray into power production. they are increasing capacity from 30 MW to 90(?) MW. they would earn tax benefits and carbon credits through this.. derisking their business is a big plus for lakshmi.
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nannu
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Posted By: iaditya
Date Posted: 13/Mar/2010 at 9:48am
Even Usher is entering into power production. Last quarter they merged their power company (the one that was supposed to do an IPO) into itself.
Not sure about this healthy rice business for Usher, but they are surely into Pusa rice in a big way (the non basmati rice govt. has classified as basmati; and hence can be exported). What i think Usher is trying to do is instead of getting into retail, they are supplying private labels for Spencers, Reliance etc; not under their present brand name of Rasoi Raja.
But definitely Usher has much smaller power production capacity (15MW versus 30MW going to 90MW for Lakshmi). But this is a function of rice processing capacity really. Once it scales up production capacity of rice; power will come automatically.
@ Hit2710: Nice point on estimates of agro stocks. But ultimately if processing capacity is there; profit capacity is there. It may depend on the monsoon but if monsson comes there is large possibility of making profit.
One digression on govt policies: Unlike sugar which is cyclical; rice is not. It will remain as regulated as it is. with msp showing the same upward trend as it has shown for past many years.
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Posted By: iaditya
Date Posted: 05/Jun/2010 at 3:13pm
http://www.business-standard.com/india/news/usher-agro-eyes-rs-1000-cr-turnover-in-two-years/96554/on
Promoters remain committed to the growth story in Usher; expecting 5times sales growth in the next 2 years!
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Posted By: excel_monkey
Date Posted: 05/Jun/2010 at 7:06pm
the low valuations are because it was named in Nirmal Kotecha scam
look at what happened to Austral Coke and Resurgere Mine
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Posted By: bihisello
Date Posted: 05/Jun/2010 at 7:11pm
Originally posted by excel_monkey
the low valuations are because it was named in Nirmal Kotecha scam
look at what happened to Austral Coke and Resurgere Mine |
You have informed properly. Now if people still want it is their choice.
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Posted By: iaditya
Date Posted: 05/Jun/2010 at 8:11pm
*This is disturbing information.
Can we say for sure that the promoters were hand in glove with Nirmal Kotecha? Or was the company a victim of its low float (so operators could corner the scrip and indulge in price manipulation without the promoters consent)? I checked the IPO prospectus of Usher, it makes no mention of Nirmal Kotecha. It appears from BSE filings that Nirmal Kotecha purchased this stock in somewhere between December 2007 and March 2008 and has been trading in it (his shareholding has fluctuated between 2-4%).
That said, I think the Company has good solid assets, but yes, this does make me more cautious.
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Posted By: excel_monkey
Date Posted: 05/Jun/2010 at 9:26pm
I don't have the details
why get stuck to Usher, try to find other opportunities
Originally posted by iaditya
*This is disturbing information.
Can we say for sure that the promoters were hand in glove with Nirmal Kotecha? Or was the company a victim of its low float (so operators could corner the scrip and indulge in price manipulation without the promoters consent)? I checked the IPO prospectus of Usher, it makes no mention of Nirmal Kotecha. It appears from BSE filings that Nirmal Kotecha purchased this stock in somewhere between December 2007 and March 2008 and has been trading in it (his shareholding has fluctuated between 2-4%).
That said, I think the Company has good solid assets, but yes, this does make me more cautious.
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Posted By: bihisello
Date Posted: 05/Jun/2010 at 9:58pm
Just my opinion, it is not easy to corner a percentage of a low float company without promoter's connivance.
Nirmal is too young to patiently accumulate 2-4% without severely impacting share price!!!
Let us not be so trusting as to take IPO prospectus at face value. Anyway, choice is up to each person but I will be careful of anyone who recommends certain stocks. Sorry.
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Posted By: iaditya
Date Posted: 05/Jun/2010 at 10:05pm
Originally posted by bihisello
Nirmal is too young to patiently accumulate 2-4% without severely impacting share price!!!
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point taken.
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Buy Solid Companies. Hold for 5 years. Avoid watching TV. Sleep Well.
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Posted By: bihisello
Date Posted: 05/Jun/2010 at 10:22pm
Also see this got by Google of "usher agro" +kotecha...
26 Apr 2009 ... The interim order alleges that Kotecha was in constant touch with Pandoo Prabhakar Naig, an independent director of Usher Agro, ...
www.livemint.com/.../Pyramid-Saimira-may-be-just-th.html
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Posted By: excel_monkey
Date Posted: 06/Jun/2010 at 3:03pm
http://www.moneylife.in/article/71/827.html
Your company has been mentioned in the fourth last para of the article
Originally posted by iaditya
http://www.business-standard.com/india/news/usher-agro-eyes-rs-1000-cr-turnover-in-two-years/96554/on
Promoters remain committed to the growth story in Usher; expecting 5times sales growth in the next 2 years! |
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Posted By: iaditya
Date Posted: 06/Jun/2010 at 11:47pm
Point taken @excelmonkey, that there may be possibility that promoter is hand in glove with Nirmal Kotecha, but this article is definitely not a good source to prove it.
To be fair, this article has got a few things wrong - including the name of the Company (Visher Agro?) and the principal line of business (flour milling?) and lack of brand (Rasoi Raja, anyone?), just a convertor (hello? what is Tata Steel?).
Company has solid fundamentals. Promoter may try to jack up prices. As long as he doesn't do anything funny with his accounting (he can given the nature of the cash handling business) I am an investor for the long run.
But it is definitely a cause of concern that promoter may NOT have great ethics.
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Buy Solid Companies. Hold for 5 years. Avoid watching TV. Sleep Well.
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Posted By: iaditya
Date Posted: 06/Jun/2010 at 11:52pm
*Just read the full article - the name is intentionally misspelt.
BTW Great article on Company ethics.
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Buy Solid Companies. Hold for 5 years. Avoid watching TV. Sleep Well.
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Posted By: TCSer
Date Posted: 07/Jun/2010 at 11:53pm
THIS MATHURA based company is atypical example of small cos having links with operators coming from no where n then shooting up.
other of this elk include tanla solutions.mic ,xl telecom,pyramid saimira,bartronics,icsa india,karturi global,divis lab,educomp etc
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